On Tuesday, David Cameron and Nick Clegg, battered and beleaguered, not least by enemies within their own camps, will attempt to set aside the drubbing both have received in the local elections, metaphorically to renew their vows as partners in the coalition. It is, for now, "business as usual": no plan for growth, only contrition, more deficit reduction, bouquets for Boris – narrowly re-elected mayor for London – and a lacklustre set of bills in the Queen's Speech on Wednesday. As one critic brutally noted: "Two losers don't equal a winning team."

Even as Ed Miliband enjoys his first week since his election as leader secure in the knowledge that the plotters and back-stabbers in his own party – potential rebels driven underground by the gain of 823 seats – must, for now, put away their blades, tomorrow it is Cameron's turn to deal with mutterings of mutiny. On Monday, a group of Tory critics will reject "barmy policies" to launch their alternative Queen's Speech. They will shun gay marriage and Lords reform for deeper welfare cuts, lower taxes and greater Euroscepticism. This is traditional right-wing territory and a reminder to the rest of us why the party needed to detoxify. As rumours of civil war in the coalition grow, Labour has cause for modest celebration. If it hasn't yet witnessed a breakthrough, it does now have a genuine opportunity to build a different kind of politics. "The process of change has just begun," Miliband said on Friday. "We've got more to do."

All three of the major parties have a whole lot more to do. While the routing of the BNP is heartening, just 32% of the electorate chose to vote, the lowest turnout since 2000. Many who rejected the ballot box believe they are fighting for economic survival in a society in which New Labour's seduction by the City has been followed by coalition policies that exact the heaviest penalties from those who can least afford them while the rich flourish. Disaffection is epidemic and politicians too often appear part of the problem rather than instrumental in the search for solutions. It is imperative that changes.

What are the immediate challenges ahead for the main political parties? Labour won 823 seats and took control of 32 councils, making advances in Scotland, the north, the Midlands, the south and Wales. The Labour leadership is said to be most pleased that it retained an overall majority in Glasgow. Alex Salmond's perceived connection with News International has not been appreciated. The song of Scottish independence may have lost some of its timbre.

Across the country, Labour attracted 38% of the vote. It requires 40% to indicate a potential victory at the general election. Further caution is required. In the 1999 local elections, the Conservatives won 1,348 seats, only for William Hague to suffer a landslide defeat in 2001, Optimists, however, may rightly argue that Labour is in revival. It has attracted more than 68,000 new members since the last general election; its electoral machinery is once more in decent working order. Sufficient, one hopes, to hold an inquiry into the selection of Ken Livingstone as Labour candidate for the London mayoral contest. Livingstone, in spite of his strong past record, personally lost London for Labour.

The party now has a strong base across Britain. Its interminable policy reviews are drawing to a close. Miliband, in spite of criticism, has hit home with his attempt to define "ethical capitalism". Last week, he outlined the five bills Labour would have proposed in the Queen's Speech, if in power. Each is couched in the framework of a fair deal; fairness has a strong resonance with voters. The proposals include restoring the 50p tax rate for those earning more than £150,000 and greater restrictions on banks and bonuses. What Miliband needs to demonstrate more vigorously is what Cameron has patently mislaid, namely competence, vision and values.

In the space of a few weeks, the Conservative party's main electoral asset has come to be portrayed as a vote-losing, bumbling toff. Major mishaps, beginning with the budget, now include the abysmal handling of the referendum on mayors. The showcase for "localism", poorly argued and without a champion, has been resoundingly rejected; incompetence again. The danger for the Tory leadership is that David Cameron, beset by critics within his own party and under pressure from his coalition partners, loses his sense of political direction. He is being pushed to the right by those who argue for a return to clear Conservative principles, but this is perhaps a miscalculation that would lose electoral support. The success of Ukip, drawing 14% of the vote in the seats it contested, adds to the pressure on Cameron to get a grip; to reshuffle; to clear out the redundant Big Ideas from the cupboard and act maturely and strategically .

Are the Tories merely suffering from midterm blues? Possibly, but there are sharp rocks ahead that require astute navigation – a skill in short supply in the Cameron team. The euro crisis; the continuing Murdoch fall-out, including the future of minister Jeremy Hunt; and the knowledge that the great majority of spending cuts are still to come make it likely that the journey ahead will be extremely rough. However, Cameron is not to be underestimated. Aided by an economic upturn, the lustre of leadership and electoral success may yet return.

The Lib-Dems seem to have trouble as a permanent bedfellow. They have lost 330 councillors, even though the calamities of the past few weeks are seen as specifically Tory clangers. Clegg, none the less, is stuck. To walk away from the coalition means electoral disaster. He argues it is the Lib Dems' duty to endure a perpetual pasting in the name of "repairing and reforming the British economy". Martyrdom is not popular within his party, with more than 50 Lib-Dem MPs facing potential unemployment in 2015.

We may yet, though, have reason to be grateful for the Lib Dems' sacrifice. Nick Clegg has pursued a policy of "differentiation", fighting for Lib Dem key policies (with mixed results) while arguing that his party's presence in the coalition anchors Cameron to the centre ground. As Cameron's rebels push even harder for him to shift to the right, however disastrous, it becomes imperative that the anchor holds fast.

Midterm elections can delude. But while the misery mounts for many, these results have highlighted how the coalition, rent by internal tensions, appears rudderless. The results have also flagged up that this could be Miliband's turning point. But, as one commentator remarked, politics is not an escalator, it is a game of snakes and ladders. For now, the dice are rolling in Labour's favour. We congratulate the party and warmly welcome the indications that we have an opposition again.